European Markets Mixed After US Lawmakers Strike Budget Deal

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By m rochan | December 11, 2013 10:00 PM EST

Most European markets open lower on 11 December (Reuters).

A bulk of all European markets opened lower on 11 December, and witnessed mixed trade thereafter, after US politicians agreed on a deal to fund the federal government past mid-January.

The Stoxx Europe 600 index opened 0.1% lower to 314.51.

Britain's FTSE 100 and Germany's DAX 30 opened 0.2% lower.

France's CAC 40 opened slightly higher.

Spain's IBEX 35 was trading 0.27% higher after opening higher.

Italy's FTSE MIB was trading 0.03% higher after opening lower.

In the US, a cross-party Congressional budget committee agreed to fund government services for another two years. The proposed deal would finance the government, which is expected to run out of funds on 15 January, and would reduce the federal deficit by $23bn (£14bn, €17bn).

House Budget Committee chairman Paul Ryan and his Senate counterpart, Patty Murray negotiated the deal in the wake of another government shutdown over federal spending.

The deal could now prompt the US Federal Reserve to trim its $85bn-a-month bond buying stimulus as early as next week. The central bank will announce its monetary policy decision on 18 December.

"We have broken through the partisanship and gridlock," Murray said at a news conference in Washington.

"This agreement makes sure that we don't have a government shutdown scenario in January. It makes sure we don't have another government shutdown scenario in October. It makes sure that we don't lurch from crisis to crisis," Republican Congressman Ryan said.

"This looks like a deal that, at the margin, adds to the probability that the Fed will feel confident in starting the QE tapering process next week, assuming that the House is going to get this passed this week and the Senate next week," Ray Attrill, the global co-head of currency strategy at National Australia Bank in Sydney told Bloomberg. "In itself, I would say it's dollar-positive," Attrill added.

Meanwhile, in Italy, Prime Minister Enrico Letta faces a confidence vote on 11 December after Silvio Berlusconi's "Forza Italia" party pulled out of the ruling coalition.

Elsewhere, in Brussels, European members failed to clinch a deal on the highly anticipated banking union owing to differences on how to shut down fragile banks. Finance ministers from the European Union were unable to agree to on the core details of how to deal with ailing banks on the continent.

In company news, RBS' stock was trading 1.78% lower at 09:05GMT in London, on news that its finance director Nathan Bostock has resigned, after just 10 weeks into the job, to join Spanish group Santander.

The high profile departure is the latest in a long line of problems that the 81% state-owned British lender has had to face in 2013.

In Asia

In Asia, Hong Kong's Hang Seng finished 1.71% lower on 11 December while the Shanghai Composite ended 1.49% lower.

South Korea's Kospi finished 0.78% lower, Australia's S&P/ASX finished 0.77% lower and the Japanese Nikkei ended 0.62% lower.

Asian markets took a beating as investors took profits, amid the interest rate liberalisation pressure that weighed down on Chinese banking stocks.

News that US lawmakers had reached a provisional two-year deal to prevent another federal shutdown failed to boost regional sentiment.

In China, the big four state-owned banks and a former state policy bank decided to issue 19bn yuan ($3.13bn) of negotiable certificates of deposit, the official Shanghai Clearing House said on 11 December. The action is another measure in Beijing's move toward liberalised interest rates.

Earlier, data from India showed that the nation's November exports rose 5.86% on an annual basis, while imports fell 16.37%. The country's November trade deficit was $9.22bn as against $10.56bn in the preceding month.

Wall Street Down

On Wall Street, indices ended lower on 10 December amid Fed QE jitters and as market players tracked budget negotiations in Washington.

The Dow finished 52 points or 0.3% lower at 15,973.13.

The S&P 500 ended 5.75 points or 0.3% lower at 1,802.62.

The Nasdaq closed 8.26 points or 0.2% at 4,060.49.

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